Speech notes by Vicky Knoetze MPL. Consideration of 2018/19 budget, Vote 5, Roads and Public Works. 15 May 2018

Corruption and Poor Planning – The Achilles Heel of the Department of Public Works

  • Moving of the Roads Programme will enable the Department of Public Works to focus on the Buildings Programme and deliver faster and better projects to client departments.
  • There must be focus on better planning, more efficient spending and eliminating poor performing and non-performing contractors from projects.

Honourable Speaker, honourable Premier, honourable members and guests, good afternoon.

Honourable Speaker, the roads/transport programme used to be Achilles heel of the Department of Roads and Public Works. Hopefully, now that the Programme has been moved to the Department of Transport, the Roads Programme will receive the attention it deserves as a critical infrastructure deliverable as one of the number 1 aspects that will impact on the economic growth of the Province. I fear that we have handed over a programme to the Department that might be so far beyond repair that all I can say is, good luck.

The Department of Public Works however still considers itself to be the nerve centre of infrastructure in the Province with all the attention now shifting to the Buildings/Public Works Programme and the EPWP Programme. I sincerely hope that we will see these programmes, especially the programme of buildings, flourish with a renewed focus and attention to meeting the needs of client departments.

The Department of Roads and Public Works is an implementing agent for other Departments, this means that:

  • There must be zero tolerance when it comes to supply chain management and tender irregularities.
  • Contractors with a poor performance and non-performance history must be black-listed as we keep burning our fingers and making the same mistakes by appointing them over and over again.
  • The needs of client departments must become a priority.
  • The Department must have a renewed focus on maintaining and looking after its own assets.

Honourable Speaker, a persistent lack of maintenance, poor security, bad project planning, ineffective public servants, corrupt politicians and business people, poor service delivery and not enough capital expenditure (because it’s all going on public service salaries) are conspiring to shake the infrastructure of South Africa and have put the private sector in a position where they are not only planning to but have positioned themselves as a ‘back-up’ plan for anything that requires government spending when it comes to infrastructure. Thank goodness the private sector has been prepared over the past decades as the public sector keeps dropping the ball.

We must start to realise Honourable Speaker, that we have an economy that is built on the back of infrastructure. And if we continue down a path where we are failing to maintain our assets, where we are failing to build new infrastructure because we are repairing old infrastructure that is falling apart, where we are reactive instead of proactive to the infrastructure needs of the province, where we allow infrastructure backlogs to grow into Billions with no recovery plan – everything is under threat as we come to a phase where, due to lack of maintenance and planning, things fall apart and along with it our economy that will never recover if we don’t act now.

Honourable Speaker, corruption swallows up huge amounts of money every year – the numbers may vary but the word “billion” crops up often. In 2011 the Council for the Advancement of the South African Constitution said that an estimated 20% of the country’s annual GDP is lost to corruption. In the same year the head of the Special Investigating Unit – mandated to “recover and prevent financial losses to the state caused by acts of corruption, fraud and maladministration” – presenting the body’s annual report, estimated that an R30-billion sum that was unaccounted for was “not unrealistic”.

Having said that, this department is guilty of irregular expenditure of R196-million in the previous financial year.

Communities often express their unhappiness and frustration with poor service delivery, lack of access to water, maladministration, and corruption through protests, which have been occurring regularly across the country.

Corruption Watch stated that their reports reveal that the most commonly named type of corruption is that linked to tenders or procurement – 44% of all reports were of this nature. Other types of corruption reported relate to bribery, mismanagement, abuse of power or resources, and employment – the latter is the second most commonly reported type of corruption.

If corruption can be stamped out, billions of Rands more will be available for service delivery and improving the lives of our people.

Honourable speaker, year in and year out The Buildings Programme which is now the strategic infrastructure project for this department attributes under-performance to poor performing contractors. I want to know, when will we stop seeing this reoccurring finding?

Although the Department is blaming poor contractors, on the other side of the coin, contractors are blaming government departments.

Contractors highlighted the following issues as some of the challenges of doing business with the Department:

  • A lack of clear scope of work;
  • Procurement policy requiring the appointment of a contractor with the lowest quote;
  • A lack of adequate capacity on project management within the Department;
  • The late payment of contractors.

It is clearly high time that firstly, the Department stops appointing contractors that are incapable of performing in terms of the scope of the tender and secondly that the Department does some introspection in terms of their role in non-performance of contractors and blacklist them for good!

South Africa is a developing country and therefore it is in the first stage of the PPP maturity scale that Deloitte and Touche refer to as the ‘developing market’.

Since 2003, the World Bank PPI database has recorded a continuous drop in investments in infrastructure PPPs in most developing countries.

A wide range of governance issues have limited the ability of PPPs to produce the desired outcomes in developing countries, these include:

  • A lack of accountability,
  • Institutional weaknesses,
  • Widespread corruption,
  • A lack of transparency,
  • Poor regulatory environments,
  • power imbalances between the private sector and the state,
  • A lack of political commitment and
  • A lack of trust, skills, will and expertise to effectively manage funds.

PPPs hold various advantages for government:

  1. The state can stay engaged in project implementation and retain substantial control over its development agenda and strategy.
  2. The government remains a key player when it entrusts the private sector with the responsibility of delivering public services.
  3. PPPs may compensate for the inefficiencies of the public sector.
  4. In a developmental state such as South Africa, the state can, therefore, use service delivery through PPP as a political symbol of responsiveness and as a policy tool with which to portray a more efficient government.
  5. PPPs are alternative service-delivery arrangements to traditional public procurement that may enhance cost-effectiveness and service delivery through accountability

Honourable Speaker, although implementing tools and policies to focus on the enhancement of accountability in Public-Private Partnerships will go a long way in eliminating issues and failures especially when it comes to non-performing and under-performing contractors. Stricter compliance measures in terms of the supply chain management process will be the other crucial element in remedying the other issues in the transport and public works programmes.

The DG of National Treasury said in 2015 that:

Supply chain management (SCM) is one of the key mechanisms enabling government to implement policy. The negative effects of inefficient public sector SCM, particularly in the procurement phase of the chain, are well documented.

Suppliers charge excessive prices; goods and services contracted for and delivered are of poor quality and unreliable; and there is corruption and waste.

In South Africa, government must start to value the strategic importance of SCM to service delivery.

Honourable Speaker, if it is implemented as envisaged in Section 217 of the Constitution, the benefits will be enormous:

  • The economy will grow as economic infrastructure is expanded and efficiently maintained.
  • Goods, services and infrastructure will be bought at lower costs.
  • For suppliers, the cost of doing business with the state should decrease substantially. Transparency and open contracting are critical elements of any public sector SCM system.

Honourable Speaker, the EPWP programme continues to be the best performing programme of the Department. If the Department can manage the Buildings Programme like the EPWP programme, this Department can become a star performer in this province.

These are a few examples of a lot that can be done to improve this department.

Honourable Speaker, a year from now we will wish we started today!

The DA supports the report by the department.

Thank you.